Intelligent news from Mozambique

China forgives $36m Mozambican debt, donates cash for new airport

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China announced on Thursday that it had pardoned more than $36 million of interest-free loans it gave to Mozambique, and also pledged to donate more than $15 million to finance construction of an airport at Xai-Xai, the capital of Gaza Province in southern Mozambique.

Four interest-free loans worth a total of 239.26 million yuan ($36,166,400) were written off at a ceremony in Maputo on Thursday morning between Chinese ambassador Su Jian and Mozambique’s deputy foreign minister Nyeleti Mondlane. They did not reveal the total debt Mozambique owes to China.

According to the Chinese ambassador to Mozambique, Su Jian, the signing of these agreements was made possible by the “solid foundation” of the “privileged cooperation” between the two countries, characterized by “reciprocal political trust and complementary economic advantages” between the both countries.

Xai-Xai airport ‘an alternative to Maputo’

The planned airport at Xai-Xai was announced by President Filipe Nyusi in 2016, stressing its importance to the growth of tourism in Gaza province. Transport minister Carlos Mesquita said in February this year that he expected China EXIM Bank to provide $60 million for its construction.

The airport, which will have a runway of 1,600 meters, will be 14 kilometers from the beach of Chongoene; 50 kilometers from the beaches of Chidenguele, 40 kilometers from Chibuto district, which holds heavy sand reserves and important agricultural projects; and 200km from Massingir, on the Mozambican border with South Africa’s Kruger National Park.

The airport’s proximity to Maputo also means it will “play a very important role as an alternative airport in emergency situations, and facilitate the assistance of populations when natural disasters occur,” Mondlane said.

The pardoning of $36m is probably of more symbolic than fiscal importance – showing that China is completely prepared to overlook the ‘hidden debts’ scandal, and indeed to provide free money for probable white elephant projects.

Mozambique’s record with new airports is not good: building one at Nacala, with Brazilian finance and contractors, turned out to be a disastrous decision, bankrupting the airport company and hardly seeing any traffic.

Xai-Xai airport would probably fare even worse: Gaza’s beaches are and will probably main mostly visited by overland tourists from South Africa, and the marginal extra convenience for Gaza’s few overseas visitors of landing at Xai-Xai will surely be outweighed by the frequency and choice of flights going to Maputo

Finally, Mozambique’s airline, LAM, struggles to service even the airports the country already has – though the entry of new participants may alleviate that.

 

© 2017, Zitamar Ltd. Reproduction and dissemination prohibited without written permission.

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